US consumers showed signs of fatigue leading up to the longest government shutdown, and their outlook has worsened ever since, sending a note of caution heading into the holiday-shopping season.<\/p>\n
Retail sales, not adjusted for inflation,\u00a0rose a tame 0.2%<\/a>\u00a0in September after several months of more robust spending, according to data released Tuesday. A more current report from the Conference Board showed consumer sentiment\u00a0slid<\/a>\u00a0to the lowest in seven months, reflecting anxiety about the labor market and the economy.\u00a0<\/p>\n \u201cIt\u2019s a picture of consumption \u2014 which has been a real engine of growth over the last few years \u2014 slowing quite a lot into the end of this year,\u201d said Oliver Allen, senior US economist at Pantheon Macroeconomics.<\/p>\n Recent corporate earnings show consumers have pulled back on some big-ticket items and are seeking bargains. But retailers like Kohl\u2019s Corp., which joined Best Buy<\/a> Co., Abercrombie & Fitch Co. and Dick\u2019s Sporting Goods Inc. in raising its forecast on Tuesday, suggest that despite their anxiety about the economy, shoppers are still willing to spend on brands they recognize and trust.<\/p>\n At Best Buy, demand during back-to-school shopping and an October sale was better than analysts forecast. That performance has led executives to predict that Black Friday will be stronger than in past years, Chief Executive Officer Corie Barry told journalists on a call. She said the electronics retailer is expecting a \u201cvery strong Cyber Monday.\u201d<\/p>\n Over half<\/a>\u00a0of Americans say they expect to spend at least the same amount as they did last year this holiday season, according to credit reporting firm TransUnion<\/a>. Part of that likely reflects higher prices though, as tariffs force some companies to\u00a0cut back<\/a>\u00a0on Black Friday deals.<\/p>\n \u201cWe\u2019re seeing more caution on the consumer front, just given everything that we\u2019re facing these days in terms of still sticky prices,\u201d said Jennifer Lee, senior economist at BMO Capital Markets. \u201cBut we can never, ever underestimate the American consumer.\u201d<\/p>\n In addition, the Conference Board\u2019s November sentiment measure was probably distorted somewhat by the shutdown as responses were collected through Nov. 18, a few days after the shutdown ended, said Jeffrey Roach, chief economist at LPL Financial. The gauge may post a small recovery in December, now that the federal government has reopened, Eliza Winger of Bloomberg Economics said in a note.<\/p>\n Pre-Shutdown Economy<\/p>\n The release of September retail sales was delayed by the shutdown. Another postponed government report published Tuesday, the\u00a0producer price index<\/a>, showed a relatively modest pickup in wholesale inflation in September, excluding volatile energy and food costs. Combined, the data bolstered trader bets that Federal Reserve officials will lower interest rates when they next meet on Dec. 9-10.<\/p>\n Policymakers remain divided over whether to lower interest rates as they debate the employment outlook with inflation still running above their goal. Thanks to the shutdown, they won\u2019t have key government data for recent months on either before they meet.<\/p>\n The pre-shutdown economy \u2014 through the end of September \u2014 is coming into view. In the retail sales data, spending fell in discretionary categories like electronics, clothing and sporting goods.<\/p>\n The figures suggest consumers lost some momentum at the end of an otherwise solid third quarter. So-called control-group sales \u2014 which feed into the government\u2019s calculation of goods spending for gross domestic product \u2014 fell 0.1%, declining for the first time in five months.<\/p>\n